On Monday, February 4, Japanese credit rating agency R&I reaffirmed its “A-” foreign currency issuer rating on the Republic of Latvia. The outlook remains stable.

Agency positively evaluates Latvia’s solid economic growth when GDP grew by 4.6 % in 2017 and projection for 2018 is 4.2 % , as well as expects that economic growth in the future will be driven by private consumption and absorption of EU funds.

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R&I will be paying attention to fiscal policy and the process of drafting a new budget by the new government. Agency expects that the new government will follow the existing fiscal policy framework and the budget plan in 2019 will be almost the same as in 2018.

R&I notes that liquidation of ABLV Bank and significant decrease in non-resident deposits did not affect country’s economy and evaluates the financial system as stable.

Agency outlines that over the medium-term the demography shifts shall draw the attention as the Latvia’s population keeps falling due to a natural decline and working-age population emigration to other euro area countries. In the long-term, the shrinking population could weigh on social security and healthcare spending. R&I expects further efforts to solve labour shortages and realize productivity improvement.

The previous credit rating agencies announcement was on October 26, 2018 when international rating agency Fitch affirmed Latvian credit rating for long-term local and foreign currency at A- with stable outlook.

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